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SCIENTiriC  COMMERCIAL 
STANDARDS 


A  LECTURE 


DELIVERED  BEEORE  THE  SOUTHERN 

ACADEMY  OF  SCIENCES,  SEPT.  7,   1903 


ALVIN  H.  LOW 
TTTTORNCY-AT-LAW  AND  AUTHOR 

or 

"  riashcs  rrom  The  Anvil  of  Thought" 
"  Common  Sense  on  Money,"  etc.,  Etc. 


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Scientific  Commercial 
Standards 


Mr.  President :,  Ladies  and  Gentlemen : 

A  standard  measure,  like  a  standard  of  morals,  is  meas- 
ured by  itself  "because  there  is  none  greater. " 

The  difficulty  of  finding  anything  on  earth  or  in  the  uni- 
verse for  that  matter,  that  is  so  fixed  and  certain  in  its  prop- 
erties that  it  can  be  selected  and  established  as  an  unvariable 
standard  of  length,  of  weight  or  of  value,  has  baffled  the  skill 
of  philosophers  and  scientists  for  all  time  past,  and  the  war 
of  the  standards  is  as  heated  and  merciless  today  as  ever  before. 
The  proof  of  this  is  found  in  the  accumulated  literature  on 
weights  an  measures,  in  our  public  and  private  libraries,  and  in 
the  laws  of  the  various  states  and  nations  of  the  world. 

I  doubt  if  the  great  mass  of  mankind,  even  those  actively 
engaged  in  trade  and  commerce,  realize  the  stupendous  im- 
portance of  the  subject— the  laws  governing  it,  like  the  law  of 
gravitation,  acting  so  silently  and  often  played  with  so  stealth- 
fully  by  those  whose  interests  are  not  alw/ays  identical  with 
the  public  good,  that  all  may  be  affected  powerfully  without 
perceiving  the  real  cause  of  disturbance. 

The  importance  of  this  subject  was  recognized  by  the 
f ramers  of  our  National  Constitution ;  for  there  in  paragraph  5 
of  section  8  of  article  1  of  that  great  charter  of  our  liberties 
it  is  provided  that  "The  Congress  shall  have  power  to  coin 
money,  regulate  the  value  thereof  and  of  foreign  coin  and  fix 
the  standard  of  weights  and  measures." 

The  importance  of  fixed  standards  and  the  necessity  for 
rigid  conformity  to  them,  is  pointed  out  and  emphasized  in  our 
earliest  literature.  Cheating  in  weights  and  measures  was  for- 
bidden among  the  first  laws  given  to  the  children  of  Israel 
while  yet  roaming  in  the  wildernesss,  and  before  reaching  the 
promised  land  where  trade  and  commerce  were  to  become  na- 
tional characteristics. 

"Thou  shalt  not  have  in  thy  bag  divers  weights,  a  great 
and  a  small.  Thou  shalt  not  have  in  thine  house  divers  meas- 


380043 


**••     >  *    1  *  **^>  A*  •  *  "  *  V      *      •>      » • » 
^"*»*l  *  "if  "'-^•t?****       *     **  * 

ures,  a  great  and  a  small.  But  thou  shalt  have  a  perfect  and 
just  weight,  a  perfect  and  a  just  measure  shalt  thou  have." 

What  matter  now  what  was  the  origin  of  their  cubit  or  of 
their  ephah  ?  The  length  of  the  human  foot  as  a  unit  of  length 
was,  I  suppose,  of  later  adoption  and  is  an  example  of  the  uncer- 
tainty of  a  standard— since  no  two  human  feet  are  of  exactly 
the  same  length  and  the  measure  by  that  name  could  at  most 
only  approximate  the  average  length  of  human  feet;  to  ascer- 
tain which  to  absolute  certainty  is  utterly  impossible.  However, 
the  origin  of  this  measure  is  attributed  to  Greece,  and  is  sup- 
posed to  have  been  the  exact  length  of  the  foot  of  the  god 
Hercules.  The  purely  scientific  origin  or  equivalent  of  this 
measure,  therefore,  I  cheerfully  leave  for  others  to  find.  The 
Olympic  foot  was,  according  to  the  best  authorities,  equivalent 
to  12.14  English  inches.  Not  less  than  292  variations  have 
existed  at  various  times  in  the  use  of  this  standard. 

But  what  of  the  inch  into  which  the  foot  is  divided?  The 
inch  is  quite  as  traditional  a  measure  as  the  foot;  though  one 
historian  assigns  it  to  Roman  origin,  and  its  length  at  some 
time  has  been  equivalent  to  the  combined  lengths  of  three 
grains  of  barley.  The  scientific  certainty  of  this  length  being 
only  approximated  by  the  average  of  the  lengths  of  a  large 
number  of  grains. 

The  learned  Scotch  astronomer  Piazzi  Smyth,  in  his  clever 
work  "Our  Inheritance  in  the  Great  Pyramid,"  labors  to  show 
that  that  stupendous  structure  was  erected  under  divine  inspi- 
ration for  the  sole  purpose  of  passing  on  to  this  and  future 
generations  a  scientific  standard  of  weights  and  measures,  and 
that  the  inch  corresponding  closely  with  the  British  inch  and 
equivalent  to  one  five  hundred  millionth  of  the  length  of  the 
earth's  axis  of  rotation  was  the  unit  of  length  used  in  the 
building  of  the  Great  Pyramid.  Smyth's  theory,  concurred  in 
by  some  other  scientists  and  investigators,  is  that  a  complete 
system  of  weights  and  measures  is  outlined  by  the  Great  Pyra- 
mid, based  upon  dimensions  of  the  earth,  its  motions  and  dis- 
tance from  the  sun. 

The  value  of  these  conclusions  is  to  me  somewhat  modified 
by  the  fact  that  they  were  promulgated  during  a  heated  con- 
troversy between  the  advocates  of  traditional  standards,  of 
which  the  British  (and  American)  system  is  the  epitome,  and 
those  of  the  French  metric  system,  which  its  enemies  de- 
nounced as  atheistic  in  its  conception  and  not  even  as  scien- 
tific in  its  foundation  as  was  claimed  for  it. 

It  is  useless  to  burden  this  lecture  with  historical  details  of 
the  variations  in  standards,  further  back  than  a  hundred  years, 
or  about  the  beginning  of  the  Nineteenth  Century,  more  than 


to  point  out  the  fact  that  at  that  time  the  inconvenience  of  the 
ruling  standards,  because  of  their  great  variety,  and  the  in- 
justice of  them  because  of  their  instability,  led  to  the  invention 
of  the  metric  system;  initiated  by  the  French  government  at 
the  suggestion  of  Prince  Talleyrand,  the  Bishop  of  Autun  in 
1790.  "He  recommended  the  length  of  the  pendulum,  beat- 
ing seconds  in  latitude  45  deg.  as  a  suitable  linear  basis  and 
introduced  into  the  National  Assembly  of  France  a  decree  em- 
bodying this  proposition." 

This  led  to  the  convening  of  an  international  commission 
composed  of  representatives  of  several  European  nations  to  de- 
termine the  exact  length  of  such  pendulum.  Later  the  system 
was  further  matured  by  a  committee  of  the  French  Academy 
of  Sciences.  "Their  report  dated  March  19,  1791,  after  con- 
sidering the  comparative  fitness  as  a  standard  of  length;  of 
the  pendulum  and  of  the  earh  itself  in  some  one  of  its  natural 
dimensions;  decided  in  favor  of  the  latter  and  recommended 
as  the  standard  unit  of  linear  measure  one-10,000,000th  of  the 
quadrant  of  a  terrestrial  meridian. ' ' 

But  this  was  only  the  beginning  of  the  work;  for  it  took 
seven  years  of  arduous  and  skillful  labor  of  two  eminent  sur- 
veyors to  measure  an  arc  of  the  meridian  selected— that  pass- 
ing through  Paris  and  extending  from  Dunkirk  to  Barcelona; 
the  object  being  to  ascertain  with  the  greatest  exactness  the 
length  of  the  linear  base  called  the  "meter."  This  having  been 
done,  a  complete  system  was  inaugurated,  having  the  meter  as 
the  fundamental  standard.  Prototypes  of  the  standards  of 
length,  capacity  and  weight  were  carefully  constructed  and 
placed  for  safe  keeping  in  the  public  archives  of  France,  June 
22,  1799.  A  later  international  commission  assembled  at  Paris 
in  1870,  in  -which  the  United  States  was  represented  by  Mr. 
Washburne,  took  further  precautions  towards  the  establish- 
ment and  perpetuation  of  the  system  in  pursuance  of  wthich 
a  set  of  standards  for  the  metric  system  were  deposited  in  the 
International  Burea  of  Weights  and  Measures  at  the  Pavillion 
de  Brsteuil  near  Sevres.  These  consist  of  a  meter,  defined  by 
the  length  at  the  melting  point  of  ice  between  two  lines  drawn 
on  a  bar  of  platiniridium  together  with  units  of  capacity  and 
weight. 

Prior  to  the  Revolution  the  American  colonies  had  gen- 
erally made  use  of  the  same  standards  as  those  of  the  mother 
country,  and  which  are  in  use  still  by  sufferance;  no  positive 
law  having  been  enacted  by  Congress  prescribing  a  single  and 
complete  system  of  either  weights  and  measures  or  of  value. 
In  these  matters  the  several  States  have  exercised  a  jurisdic- 
tion—each as  an  independent  sovereignty,  not  contemplated 


by  the  Constitution,  if  not  in  violation  of  its  express  provis- 
ions; for  when  in  its  first  article  above  quoted,  the  right  was 
conferred  on  Congress,  the  duty  of  exercising  that  right  was 
also  imposed,  from  the  very  necessity  of  the  case. 

Let  us  see  now  what  Congress  has  done  towards  fulfilling 
its  duty  in  this  behalf.  By  act  of  Congress  of  May  19,  1828, 
it  was  provided  that  that  certain  brass  troy  pound  weight 
procured  by  the  Minister  of  the  United  States  at  Lori -on,  in 
the  year  1827,  should  be  the  standard  troy  pound  of  the  United 
States  for  use  in  the  mint  for  coinage  purposes.  By  resolution 
June  14,  1836,  it  directed  the  Secretary  of  the  Treasury  to 
cause  a  complete  set  of  all  the  weights  and  measures 
"adopted"  as  standards  and  then  made  or  in  process  of  manu- 
facture for  the  use  of  custom  houses  and  for  other  purposes, 
to  be  furnished  to  the  Governor  of  each  State  in  the  Union, 
etc.,  "to  the  end  that  an  uniform  standard  of  weights  and 
measures  may  be  established  throughout  the  United  States." 

The  Legislature  of  Pennsylvania  had  by  an  act  of  April 
15,  1834,  adopted  the  troy  pound  above  referred  to  and  also 
enacted  that  the  positive  standards  then  in  use  should  for  ver- 
ification be  referred  to  "natural  invariable  standards."  Thus 
the  length  of  the  standard  yard  to  be  compared  with  that  of 
the  pendulum  vibrating  seconds,  etc.,  and  that  of  weight  to  be 
compared  to  that  of  100  standard  cubic  inches  of:  water  at  its 
maximum  density  and  at  convenient  atmospheric  pressure,  etc. 

By  an  act  of  July  28,  1866,  Congress  legalized  the  metric 
system  throughout  the  United  States— not  however  making  it 
compulsory  and  declared  what  the  equivalents  of  the  terms  of 
the  weights  and  measures  then  in  use  in  the  United  States  were 
in  the  metric  system.  By  act  of  February  12,  1873,  Congress 
substantially  re-enacted  the  law  of  May  19,  1828,  relating  to 
the  troy  pound  for  the  regulation  of  coinage.  By  act  of  July 
11,  1890,  Congress  provided  for  the  repair  of  the  standard 
sets.  By  act  of  March  3,  1891,  it  established  the  National 
Bureau  of  Standards.  By  act  of  July  12,  1894,  it  defined  and 
established  units  of  electrical  measure,  and  by  act  of  August 
18,  1894,  it  provided  for  replacing  lost  sets  of  standards. 

Now,  aside  from  our  electrical  standards,  what  systems 
of  weights  and  measures  have  we  in  use  in  the  United  States 
and  what  claims  have  they  upon  science  for  their  characters? 

That  no  one  system  is  compulsory  is  obvious  from  the  fact 
that  there  are  at  least  three  distinct  and  independent  systems 
of  weights  (not  counting  apothecary's  weight)  now  in  daily 
use,  to-wit:  the  troy,  the  avoirdupois  and  the  metric.  A  grain 
of  wheat  is  the  fundamental  scientific  (?)  unit  of  the  first  two 
and  a  subdivision  of  the  polar  circumference  of  the  earth,  call- 


ed  the  meter,  is  that  of  the  third.  The  grain  is  also  the  fun- 
damental unit  of  length  in  the  old  systems  where  the  standard 
unit  of  length  is  the  yard  of  36  inches ;  since  the  inch  when  re- 
ferred to  its  fundamental  scientific  (?)  basis  is  the  length  of  3 
barley  corns  or  grains  of  barley. 

But  what  matters  it  whether  the  fundamental  unit  of 
weights  and  measures  consists  of  a  natural  or  an  artificial  ob- 
ject? The  question  suggests  its  own  answer.  Fixity  is  the 
primary  consideration.  The  difficulties  in  the  adoption  of  a 
terrestrial  dimension  either  of  circumference  or  diameter,  or  of 
its  mass  or  attractive  force  operating  upon  the  pendulum  are 
disclosed  by  Sir  John  Herschel  in  his  interesting  lecture  on 
"The  Yard,  the  Pendulum  and  the  Meter/'  read  at  a  meet- 
ing of  the  Leeds  Astromical  Society  October  27,  1863. 

It  is  a  matter  for  profound  meditation  that  though  we  go 
to  the  ends  of  the  earth  or  to  the  center  thereof,  there  is  noth- 
ing so  absolute  and  fixed  in  dimension  that  it  may  be  referred 
to  as  an  absolute  standard  of  length,  but  that  with  all  the  sci- 
ence and  skill  of  the  twentieth  century  every  measurement  has 
some  element  of  variability  in  itself  or  in  the  means  of  its  adop- 
tion as  a  standard.  I  apprehend,  however,  that  our  inconven- 
ience from  this  fact  at  this  time  is  more  imaginary  than  real; 
as  for  practical  use,  the  metric  system  as  now  established,  is 
adequate  for  all  purposes  of  measurement  of  distance,  dimen- 
sion, capacity  and  weight,  except  perhaps  as  applied  to  the 
stellar  universe.  It  is  a  decimal  system  and  far  more  conven- 
ient in  reckoning  than  any  of  the  old  forms  which  it  has  well 
nigh  displaced  in  all  civilized  countries  except  Great  Britain 
and  the  United  States. 

If  any  of  the  nations  of  the  earth  will  approximate  the 
precautions  provided  by  the  International  Commission  of  1870 
to  preserve  copies  of  the  standards  then  provided,  there 
will  never  be  occasion  for  a  resort  to  the  actual  length  of  a 
meridian  of  the  globe  to  determine  the  length  of  the  standard 
meter. 

How  long  must  it  be  before  Congress  will  exercise  its  sov- 
ereign function  in  this  behalf  and  abolishing  and  forbidding 
the  use  of  every  other  system,  establish  the  metric  as  the  sole 
and  only  lawful  system?  Why  should  not  Congress  say  to  the 
people  of  the  United  States  what  the  great  law-giver  did  to  the 
Israelites,  "thou  shalt  not  have  in  thy  bag  divers  weighs,  a 
great  and  a  small.  Thou  shalt  not  have  in  thy  house  divers 
measures,  a  great  and  a  small.  But  thou  shalt  have  a  perfect 
and  a  just  weight  and  a  perfect  and  a  just  measure  shalt  thou 
have." 

The  people  of  the  United  States  are  far  behind  the  an- 


cients  in  this  matter,  for  we  have  in  daily  use  an  avoirdupois 
pound  equal  to  7,000  grains ;  a  troy  pound  equal  to  5,760  grains 
and  a  kilogram  equal  to  15,432.2  grains.  Also  a  yard  equal  to 
36  inches  as  a  standard  unit  of  length  and  a  meter  equal  to 
39.37  inches  as  another  standard  unit  of  length.  Similar  con- 
fusion exists  among  the  other  weights  and  measures  growing 
out  of  these.  It  is  obvious  therefore  that  Congress  has  some- 
thing yet  to  do  in  this  matter. 


But  there  is  still  another  measuring  system  that  I  have 
thus  far  but  little  more  than  metioned,  which  in  importance 
transcends  all  the  others,  inasmuch  as  it  is  used  more  than  any 
or  all  of  them  combined— that  of  money. 

From  the  earliest  history  of  commerce,  a  standard  of  value 
has  been  as  interesting  and  important  a  subject  as  that  of 
length,  aye,  vastly  more  so;  and  though  the  diversity  of 
weights  and  measures  has  been  as  great  as  that  of  tongues  at 
the  Tower  of  Babel,  the  variety  of  standards  of  value  both  as 
to  quality  and  quantity  exceeds  them  all,  and  to  this  very  hour 
the  crudest,  most  antiquated  and  unscientific  measuring  sys- 
tem in  use  is  that  for  determining  commercial  values.  I  say 
commercial  value  to  distinguish  the  values  under  discussion 
from  intrinsic  values  in  general;  embracing  in  the  former  only 
such  values  as  are  possessed  by  objects  which  are  limited  in 
supply  and  in  demand  for  use. 

It  is  needless  to  say,  except  for  illustration,  that  iron,  cat- 
tle, leather,  shells,  beads,  tobacco,  skins  and  doubtless  many 
other  things,  as  well  as  copper,  silver  and  gold,  have  at  one 
time  or  another  and  in  one  country  or  another,  been  used  as 
a  medium  of  exchange  and  standard  of  value.  Gradually  one 
thing  has  been  succeeded  by  another,  until  at  last  gold  has 
superseded  all  other  materials  in  the  greater  commercial  coun- 
tries, and  with  the  exception  of  silver  it  has  displaced  all  oth- 
ers throughout  the  civilized  world. 

The  superiority  of  its  qualifications  over  those  materials 
which  it  has  displaced  as  a  standard  for  money,  is  only  in  de- 
gree. It  is  more  limited  in  supply  than  iron;  more  divisible 
than  the  ox;  more  durable  than  leather;  more  beautiful  than 
tobacco;  more  useful  than  shells  or  beads,  and  less  ebundant 
than  copper  or  silver.  It  is  of  great  use  in  the  arts.  Between 
gold  and  silver  there  is  still  a  struggle  for  the  mastery;  one 
must  win  and  that  upon  its  merits.  It  is  obvious  to  me  that 
two  separate  and  distinct  standards  of  value  cannot  exist  har- 
moniously and  on  equal  footing  in  any  country  at  the  same 
time.  It  is  impractical  and  scientifically  and  absolutely  im- 


possible.  No  man  can  serve  two  masters  and  love  and  serve 
them  both  equally.  No  more  will  a  people  hold  in  exactly  the 
same  estimation  any  given  quantity  of  two  metals  upon  which 
the  law  of  supply  and  demand  is  constantly  acting,  with  vary- 
ing supply  and  demand  of  each,  having  no  fixed  relationship 
to  the  supply  or  demand  of  .the  other. 

It  is  my  conviction  at  this  time,  that  where  gold  has  be- 
come the  sole  standard  of  value,  as  in  the  United  States  and 
mt>st  other  great  commercial  countries,  a  change  from  a  gold 
to  a  silver  standard  would  work  immeasurably  more  injustice 
and  wrong  than  will  be  done  by  perpetuating  it.  Changing 
from  one  standard  to  another  is  practically  the  same  in  its  in- 
jurious effects  as  increasing  or  diminishing  the  amount  of  the 
standard  material  of  which  the  unit  of  the  money  system  is 
composed. 

My  audience  needs  no  enumeration  of  instances  in  which 
incalculable  injustice  has  been  perpetrated  upon  a  people  by 
each  of  these  methods— no  less  in  our  own  country  than  those 
of  others;  and  the  injustice  is  none  the  less,  whether  the  per- 
petration was  through  ignorance  or  design. 

The  question  with  us  now  is,  can  we  set  up  any  barrier  to 
a  repetition  of  these  crimes  against  unsuspecting  or  otherwise 
helpless  humanity? 

As  I  think  I  have  clearly  shown,  Congress  has  been  woe- 
fully derelict  of  duty  in  failing  to  fix  the  standard  of  weights 
and  measures.  It  has  been  doubly  so  in  failing  to  fix  the  stand- 
ard of  value.  The  clause  of  the  Constitution  before  quoted 
says  "The  Congress  shall  have  power  to  coin  money,  regulate 
the  value  thereof  and  of  foreign  coin  and  fix  the  standard  of 
weights  and  measures."  I  hold  that  therein  is  embodied  au- 
thority over  the  money  system  of  a  two-fold  nature,  either  of 
which  is  ample  and  if  properly  exercised,  as  contemplated  by 
the  mind  that  inspired  the  framing  of  that  article,  we  may  have 
a  money  system  having  as  scientific  a  basis,  and  answering  the 
purpose  for  which  it  is  designed,  as  perfectly  as  the  metric 
system  of  weights  and  measures.  In  this  matter,  as  in  the 
other,  Congress  has  entered  upon  its  duty  and  done  something 
—perhaps  we  may  say  much— for  at  an  early  day  it  established 
a  mint  and  entered  upon  the  duty  of  coining  metal  money,  and 
this  right  and  duty  too  it  exercises  exclusively.  Congress  has 
also  in  1873  adopted  a  standard  of  security,  a  unit  of  value, 
consisting  of  23.22  grains  in  weight  of  gold,  coined  with 
alloy  into  a  one-dollar  piece  weighing  25.8  grains.  This  after  a 
period  of  nearly  a  hundred  years,  during  which  time  commerce 
had  struggled  under  the  incubus  of  a  double  standard— in  the- 
ory at  least— while  in  fact  preference  has  alternately  shifted 


from  silver  to  gold  and  from  gold  to  silver,  as  the  ratios  be- 
tween supply  and  demand  for  the  two  metals  has  varied. 

It  is  a  debatable  question  whether,  owing  to  the  limited 
supply  of  both  gold  and  silver,  a  standard  of  security  and  unit 
of  value  consisting  of  an  alloy  of  gold  and  silver  might  be 
adopted  which  would  answer  the  needs  of  commerce  better 
than  one  consisting  of  either  of  them  singly,  and  which  would 
endow  both  metals  with  the  dignity  of  the  standard  without 
the  distracting  complications  resulting  from  the  preposterous 
attempt  to  use  two  distinct  and  separate  standards  at  the  same 
time ;  but  I  do  not  wish  here  to  more  than  offer  the  suggestion 
as  a  subject  for  future  consideration. 

I  have  mentioned  gold  as  the  standard  of  security  in  this 
country.  Gold  as  such  is  not  money.  Coining  it,  stamping  it 
as  directed  by  law,  endows  it  with  a  function  which  it  does  not 
otherwise  have.  As  coin,  it  is  money,  a  lawful  medium  of  ex- 
change and  compulsorily  receivable  in  payment  of  debts— a 
legal  tender. 

We  have  also  silver  coins,  the  alloyed  unit  of  which  con- 
tains 412%  grains,  but  these  silver  coins  are  only  a  legal  ten- 
der where  not  otherwise  expressed  in  the  contract  and  the  se- 
curity they  carry  is  less  in  dignity  than  that  of  the  gold  coins 
inasmuch  as  the  difference  between  the  bullion  value  of  the 
silver  in  the  coin  and  its  nominal  value  is  made  up  of  the  credit 
of  the  government— its  ability  and  willingness  to  redeem  the 
silver  coins  by  receiving  them  in  payment  of  debts  to  the  gov- 
ernment at  their  nominal  value  or  by  exchanging  gold  coin  for 
them.  And  this  is  about  the  extent  to  which  Congress  has  gone 
in  assuming  and  exercising  this  sovereign  prerogative,  the  es- 
tablishment and  maintainance  of  the  money  system  of  the 
country. 

It  has,  however  at  divers  times  caused  the  credit  of  the 
government  to  be  coined  into  paper  money,  of  which  the  so- 
called  greenback  is  the  most  popular  example,  but  it  has 
farmed  out  to  private  corporations  this  inestimable  prerogative 
of  its  sovereignty  to  such  an  extent  that  a  large  proportion  of 
our  current  money  is  issued  by  these  corporations  for  their 
personal  and  exclusive  advantage  and  with  baneful  results  to 
all  the  other  branches  of  business  fully  commensurate  with 
the  motive. 

As  reported  in  the  daily  papers,  President  Roosevelt,  in 
his  speech  at  Quincey,  111.,  on  April  29,  1903,  described  the  un- 
satisfactory working  of  our  currency  system  and  pointed  to 
results  still  to  be  striven  for,  with  a  clearness  characteristic  of 
the  man,  and  which  I  will  quote  as  a  starting  point  for  the  next 
division  of  my  subject.  He  says: 


10 


"Our  currency  laws  have  been  recently  strengthened  to 
secure  permanency  of  values,  but  this  does  not  imply  that 
these  laws  may  not  be  still  further  improved  and  strengthened. 
It  was  well  nigh  universally  admitted  that  our  currency  sys- 
tem is  wanting  in  elasticity;  that  is,  the  volume  does  not  re- 
spond to  the  varying  needs  of  the  country  as  a  whole,  nor  to 
the  varying  needs  of  different  localities.  Our  people  scarcely 
need  to  be  reminded  that  grain  raising  communities  require  a 
larger  volume  of  currency  at  harvest  time  than  during  the  sum- 
mer months.  The  same  principle  applies  to  every  industry,  to 
every  community.  Our  currency  laws  need  such  modification 
as  will  insure  the  parity  of  every  dollar  coined  or  issued  by  the 
government  and  such  expansion  and  contraction  of  our  cur- 
rency as  will  promptly  and  automatically  respond  to  the  vary- 
ing demands  of  commerce.  Permanent  increase  would  be 
dangerous.  Permanent  contraction  is  ruinous,  but  the  needed 
elasticity  must  be  brought  about  by  provisions  which  will  per- 
mit both  contraction  and  expansion  as  the  varying  needs  of 
the  several  communities  and  business  interests  may  require. " 


"The  Congress  shall  have  power  to  coin  money,  regulate 
the  value  thereof  *  *  *  and  fix  the  standard  of  * 
*  *  *  measures." 

Money  is  the  measure  of  value.  Congress  has  declared  what 
the  material  and  the  quantity  thereof  shall  be  the  unit  of 
value,  but  it  has  not  declared  what  the  value  of  that  unit  shall 
be  nor  provided  means  for  regulating  it  nor  the  standard 
money  of  which  it  is  the  touch  stone. 

Webster  defines  value  to  be  "the  property  or  properties  of 
a  thing  which  render  it  useful,  or  the  degree  of  such  property 
or  properties."  And  this  is  the  sense  in  which  the  word  value 
is  used  in  money,  as  in  all  other  things  of  commerce.  A  stand- 
ard in  the  sense  in  which  we  are  using  the  word  means  a  thing 
with  which  other  things  of  its  kind  are  compared.  It  is  the  ulti- 
mate and  last  resort  in  determining  distance,  weight,  capacity 
or  value,  as  the  case  may  be. 

It  is  written  that  in  His  promise  to  Abraham,  God  swore 
by  himself  because  there  was  none  greater.  So  also  is  a  fixed 
standard  measured  by  itself,  because  there  is  none  of  greater 
authority.  In  regulating  the  value  of  money,  the  States,  now 
forty-five  of  them,  to  say  nothing  of  the  territories,  each  for 
itself,  has  exercised  the  prerogative  of  regulating  (or  disturb- 
ing) the  value  of  money;  for  each  State  has,  without  any  pro- 
test from  Congress,  but  rather  with  its  sanction  and  approval, 
established  a  maximum  rate  of  interest,  which  is  lawful  to 

ii 


charge,  by  the  money-lender  or  creditor,  although  in  some 
States  the  rate  in  matters  of  contract  is  purely  a  subject  of 
mutual  agreement. 

Congress  has  never  established  an  exclusive  and  uniform 
rate  of  interest ;  on  the  contrary,  in  enacting  the  law  relating  to 
national  banks  it  expressly  provides  that  in  matters  of  interest 
the  banks  may  charge  the  rates  aiiow'ed  by  the  laws  of  the 
States  and  territories  in  which  they  may  be  severally  located, 
and  7  per  cent,  where  no  other  rate  is  established. 

Now  what  is  interest,  and  what  has  it  to  do  with  our  sub- 
ject? Interest  is  the  premium  paid  for  the  use  of  money. 
Money,  like  every  other  useful  thing,  is  subject  in  its  value  to 
the  law  of  supply  and  demand,  and  interest  on  money  denotes 
the  ratio  between  the  supply  of  and  demand  for  money,  and  as 
applied  to  our  unit  of  value,  it  means,  for  example,  that  with 
interest  at  7  per  cent,  per  annum  for  the  use  of  $100  for  one  year 
the  borrower  will  pay  the  lender,  together  with  the  principal, 
$7  more  in  gold  coin  or  its  equivalent  in  money  of  the  same 
value.  There  is  no  fixed  rate  of  interest  in  this  country,  nor 
in  any  other  that  I  know  of,  and  no  fixed  value  to  our  standard 
unit  of  value.  There  should  be,  and  if  our  money  system  ever 
reaches  even  the  scientific  exactness  of  the  metric  or  any  other 
of  the  prevailing  measuring  systems  there  must  be  further 
legislation  to  that  end.  If  gold  or  even  gold  and  silver  were 
the  only  elements  that  netered  into  our  currency  it  would  be 
practically  impossible  to  establish  and  maintain  a  rate  of  in- 
terest that  would  not  be  violated  in  commercial  transactions. 
The  supply  being  limited  and  the  material  composing  the  cur- 
rency being  subject  to  corners  and  monopoly,  any  demand  for 
money  exceeding  that  indicated  by  the  legal  rate  of  interest 
would  be  taken  advantage  of  by  money  lenders  and  those  need- 
ing the  use  of  borrowed  money  would  be  forced  to  pay  the  ex- 
cessive and  usurious  rate  or  go  to  the  wall  in  their  business. 

In  fact  these  are  conditions  existing  this  very  hour  in 
thousands  of  places  and  have  been  so  at  all  times  and  at  various 
places  ever  since  money  was  invented;  although  during  the 
past  few  hundred  years  a  substitute  for  metal  money  has  been 
in  use  in  company  with  metal  money  of  such  excellence  and 
adaptability  that  without  it  commerce  would  lapse  into  a  state 
of  barbarism— I  mean  coined  credit  or  so-called  paper  money. 
Without  this  it  would  be  idle  to  talk  of  fixing  the  rate  of  in- 
terest or  regulating  to  any  adequate  degree  the  value  of  money. 
With  it  the  field  is  clear  and  the  way  open.  Money,  as  I  have 
said,  is  subject  in  its  value  to  the  law  of  supply  and  demand. 
The  demand  for  money  at  some  rate  could  not  be  goverened 
by  human  legislation  and  ought  not  to  be  if  it  could. 


12 


It  is  in  the  supply  of  money— currency—  that  the  means 
lie  for  not  only  regulating,  but  fixing  the  value  of  money.  As 
I  have  said  of  standards  of  weights  and  other  measures,  abso- 
lute fixity  is  seemingly  impossible  in  anything;  but  with  the 
value  of  money  as  with  the  length  of  the  meter,  there  is  a  pos- 
sibility of  such  fixity  as  will  render  money  at  least  approxi- 
mately as  perfect  a  standard  of  value  as  the  meter  is  that  of 
length.  As  stated  by  the  President  in  the  speech  before  quoted, 
our  currency  system  is  wanting  in  elasticity.  That  is  what  has 
been  the  chief  ailment  of  our  money  system  from  the  very 
first.  The  justification  of  the  government  for  authorizing 
private  banks  of  issue  is  and  has  always  been  to  provide  elasti- 
city to  the  currency,  ad  it  has  done  so  admirably— for  the  bene- 
fit of  the  money  lenders,  but  a  sorry  substitute  for  government 
regulation  and  control;  as  is  demonstrated  in  the  fact  that 
money  is  never  supplied  to  meet  the  demand  at  the  same  rate  of 
interest  in  two  places  at  the  same  time,  and  not  so  in  any  place 
for  any  considerable  length  of  time.  Money  on  call  in  New 
York  at  4  and  6  per  cent  today;  last  fall  it  rose  to  100  per 
cent.  While  the  great  farming  country  of  the  West  was  be- 
ing reclaimed  by  the  pioneers,  money  loaned  readily  at  from 
25  to  50  per  cent,  and  throughout  the  entire  country  the  rate 
of  interest  has  always  been— like  the  freight  rate  on  the  rail- 
roads—''all  the  trade  would  bear." 

It  was  only  last  fall  that  the  Secretary  of  the  Treasury 
deemed  it  his  duty  to  strain  every  authority  conferred  on  him 
by  law  to  avert  a  money  panic,  which  had  it  come,  would  only 
have  been  one  more  in  the  catalogue  of  panics  which  have 
broken  upon  the  commercial  world  to  the  cost  of  untold  misery, 
injustice  and  ruin.  To  depend  upon  such  means  to  regulate 
our  money  values  is  as  foolish  as  to  try  to  dam  the  Mississippi 
river  to  avert  a  flood.  To  say  nothing  of  the  inconsistency  and 
injustice  of  granting  to  private  persons  or  corporations  the 
exclusive  right  of  issuing  money— charging  interest  on  what 
they  owe— it  is  vain  to  expect  or  hope  for  a  supply  of  money 
from  that  source  that  will  properly  meet  the  demands  of  the 
other  branches  of  commerce  at  a  just  or  at  any  rate  of  interest. 
It  is  contrary  to  the  laws  of  nature ;  for  the  law  of  supply  and 
demand  is  as  much  a  natural  law  as  that  of  gravitation,  and  self 
love  is  at  the  bottom  of  every  voluntary  human  action.  There 
is  no  motive  but  that  of  self-love  or  selfishness  that  moves  the 
money  lender  to  part  with  the  use  of  his  money  and  the 
despotism  and  tyranny  of  Shylock  is  ingrain  in  human  nature, 
daily  manifesting  itself  in  varying  degrees,  but  nowhere  more 
conspicuously  than  in  the  issue  and  manipulation  of  paper 
money. 

13 


Fixing  the  rate  of  interest  is  but  one  step  necessary  to- 
ward an  elastic  currency.  There  must  be  provision  made  for 
issuing,  coining  paper  money  to  meet  the  demand  at  that  rate. 
What  hope  have  we  or  can  we  have  of  private  so-called  National 
Banks  providing  such  facilities?  None  whatever.  It  is  puerile 
to  say  that  the  government  can  authorize  to  be  done  by  another 
that  which  it  cannot  do  by  itself;  and  it  seems  to  me  little  less 
than  treasonable  for  Congress  to  give  to  private  persons  or 
corporations  the  sovereign  function  of  issuing  money,  which 
in  the  very  naure  of  man,  cannot  be  exercised  by  them  other 
than  for  their  private  advantage  at  the  expense  of  the  rest  of 
the  community.  The  government  should  reclaim  this  ab- 
dicated power  as  inhering  inalienably  in  the  people  and  using 
the  same  or  similar  machinery  as  now  employed  by  the  banks, 
take  upon  itself  the  duty  of  issuing  all  the  money  by  loading 
it  as  the  banks  now  do  on  proper  security  and  on  demand,  but 
at  a  fixed  rate  of  interest.  By  this  method  the  demand  for 
money  would  alone  cause  an  increase  or  a  lessening  of  the 
volume  and  commercial  prosperity  would  depend  upon  the  de- 
mand for  and  supply  of  the  other  commodities  of  use,  and  not 
upon  the  manipulation  of  the  money  market.  The  invention 
of  coined  credit  was  an  inestimable  boon  to  mankind.  Let  it 
continue  to  be  such  and  not  alternately  a  blessing  and  a  curse. 
"Were  it  not  that  the  value  of  gold  is  immensely  enhanced  by 
its  use  as  money  and  that  by  the  same  power  that  authorizes 
the  use  of  coined  credit,  there  would  be  no  means  of  regulating 
or  fixing  its  value,  but  since  paper  money  simply  supplies  the 
currency  so  far  and  only  so  far  as  the  supply  of  gold  and  silver 
money  is  inadequate,  it  is  within  the  power  of  Congress,  meas- 
urably, at  least,  and  with  the  co-operation  of  other  gold-stand- 
ard countries,  substantially  to  fix  its  value  by  fixing  the  rate 
of  interest  and  providing  credit  money  of  the  same  value  to 
meet  the  demands  of  commerce  at  that  rate. 

What  such  legislation  and  such  a  money  system  would 
mean  to  all  industries  can  scarcely  be  measured  by  the  imagina- 
tion, and  what  a  just  rate  of  interest  would  mean  to  the  wage 
earner  is  a  theme  worthy  of  a  more  extensive  consideration 
than  can  properly  be  given  here  and  now.  Knowledge  grows 
and  as  we  see  our  present  systems  of  weights  and  measures 
and  of  money  are  the  outgrowth  of  cruder  and  more  cumber- 
some beginnings,  let  us  hope  that  the  first  quarter  (may  I  say 
decade?)  of  the  twentieth  century  will  see  in  this  country,  at 
least,  one  exclusive  system  of  weights  and  measures  and  a 
money  system  based  upon  scientific  standards  that  do  not  vary, 
to  the  end  that  justice  and  righteousness  may  prevail  among 
men. 


SOME  STARTLING  STATISTICS 
AND  THEIR  WARNING 

BY   ALVIN    H    LOW 

Author  of  "Land,  Money  and  Highways:    Evils   and  Remedies,"   "Leaves   from 
My  Note  Book,9'  "The  War  and  Economic  Justice,"  Etc.,  Etc. 


It  has  been,  well  said,  "Figures  don't  lie,  but  you  can  lie  with   figures." 

The  writer  is  not  responsible  for  the  accuracy  of  the  statistics  given  below, 

as  they  are  copied  from  the  U.  S.  Statistical  Abstract. 

"Statistical   Record  of  the  Progress  of  the  United   States,  1800  to   1915." 
Note — "True  value  of  real  and   personal  property;    the   figures  are  those 

of  the  Bureau  of  the  Census,  Department  of  Commerce,  relate  to  continental 

United  States,  and  cover  census  years." 

Year  1850— Total  wealth,  $  7,135,780,000;  per  capita,  $  307.69 
Year  1860 — Total  wealth,  $  16,159,616,000;  per  capita,  $  513.93 
Year  1870— Total  wealth,  $  30,068,518,000;  per  capita,  $•  779.83 
Year  1880— Total  wealth,  $  43,642,000,000;  per  capita,  $  870.20 
Year  1890— Total  wealth,  $  65,037,091,000;  per  capita,  $1,035.57 
Year  1900 — Total  wealth,  $  88,517,307,000;  per  capita,  $1,164.79 
Year  1904— Total  wealth,  $107,104,212,000;  per  capita,  $1,318.11 
Year  1912— Total  wealth,  $187,739,071,000;  per  capita,  $1,965.00 

The  foregoing  figures  indicate  an  abnormal  increase  from  1900  to  1912. 
On  consulting  Table  No.  347,  we  find  that  the  total  increase  of  value  of  Real 
property  from  1900  to  1912  was  $58,139,704,907. 

These  figures  seem  to  show  that  by  1900  we  had  reached  the  limit  of  free 
land;  that  is,  land  that  is  most  desirable  for  useful  purposes,  and  that  for  the 
future,  land  values  will  continue  to  rise,  by  virtue  of  the  law  of  supply  and 
demand,  just  about  as  population  increases. 

The  intrinsic  value  of  Land  does  not  change.  An  acre  of  land  responded 
to  the  labor  of  man  in  1492  as  generously  as  a  like  acre  responds  to  like  treat- 
ment in  1917.  The  available  land  of  the  Earth  is  limited  in  supply.  Measured 
by  the  money  standard,  the  value  of  a  given  area  will  increase  with  increased 
domand  due  to  increase  of  population  and  improved  methods  of  cultivation. 

In  round  numbers,  the  population  of  Continental  United  States  in  1850 
was  twenty-three  million;  in  1900  it  was  seventy-six  million,  and  in  1915  it  was 
one  hundred  million. 

Aside  from  land,  there  are  two  factors  or  things  that  contribute  to  the 
value  (usefulness)  of  things: — live  labor,  and  dead  or  crystallized  labor  which 
we  call  capital.  There  is  a  relentless,  never-ceasing  war  between  the  possessors 
of  these  two  factors  of  production;  always  has  been,  is  now,  and  the  end  is  not 
yet  in  sight. 

The  purpose  of  this  inquiry  is,  to  ascertain  as  nearly  as  possible,  by  the 
use  of  facts  and  figures,  what  share  or  proportion  of  the  increase  of  wealth 
in  this  Country,  has  gone  and  is  going  to  each  factor  of  its  production.  When 
we  have  solved  this  problem,  we  will  be  able  to  adjust  our  legislation  to  it, 
so  as  to  insure  justice  to  each  of  these  two  contending  forces; — that  done,  it 
will  follow  as  of  course,  that  if  we  establish  justice  for  either  one  of  them, 
justice  will,  by  the  same  process,  be  established  for  the  other. 

Now,  discarding  smaller  fractions,  and  computing  by  decades,  from  1850 
to  1900,  we  find  that  the  average  increase  of  wealth  in  the  United  States  was 
as  follows: 

From  1850  to  1860,  12.6  per  cent;  1860  to  1870,  8.6  per  cent;  1870  to  1880, 
4.5  per  cent;  1880  to  1890,  4.9  per  cent;  1890  to  1900,  3.6  per  cent;  and  from 
1900  to  1904  it  was  5.3  per  cent  and  from  1904  to  1912  it  was  9.4  per  cent. 

Other  things  being  equal,  and  reckoning  a  family  of  five  persons   is  the 


unit  of  well  organized  society,  each  family  in  the  periods  above  mentioned 
should  have  possessed  wealth  as  follows: 

In  1850,  $1,538;  in  1860,  $2.570;  in  1870,  $3,899;  in  1880,  $4,351;  in  1890, 
$5,178;  in  1900,  $5,824;  in  1904,  $6,591;  in  1912,  $9,825.  Unfortunately  for  the 
purposes  of  this  inquiry,  we  have  no  authentic  statistics  up  to  the  year  1913 
from  which  to  calculate  the  rate  at  which  the  wealth  of  this  country  has  been 
centralized,  exploited  or  pilfered  from  the  many  into  the  possession  of  the  few, 
as  it  surely  has  been,  as  demonstrated  by  the  Personal  incomes  accounted  for 
by  the  sworn  statements  of  individuals  in  their  returns  to  the  Federal  Govern- 
ment for  the  years  1913,  1914,  1915  and  1916,  as  per  the  report  of  the  Com- 
missioner of  Internal  Revenue,  which  is  as  follows: 

For  the  year  1913,  out  of  the  one  hundred  million  or  more  people  in  the 
United  States,  only  357,598  returned  net  incomes  of  over  $3,000  per  year.  Of 
these,  84  persons  had  net  incomes  of  $300,000  or  over;  44  had  net  incomes  of 
$400,000  or  over;  91  had  net  incomes  of  $500,000  or  over;  and  44  had  net  incomes 
of  $1,000,000  or  over;  the  record  stops  there.  In  the  year  1914  the  number  of 
returns  fell  to  357,515  while  the  larger  incomes  increased  and  were  as  follows: 

There  were  147  net  incomes  of  $300,000  or  over;  69  of  $400,000  or  over; 
114  of  $500,000  or  over  and  60  of  $1,000,000  or  over. 

In  1915  the  total  number  of  returns  of  over  $3,000  fell  still  more  to  336,652 
while  the  larger  incomes  had  risen  in  numbers  and  were  as  follows:  There 
were  254  net  incomes  of  $300,000  or  over;  122  of  $400,000  or  over;  209  of 
$500,000  or  over;  and  120  of  $1,000,000  or  over. 

In  the  year  1916,  while  the  total  number  of  returns  over  $3,000  rose  (prob- 
ably due  to  some  increase  in  salaries),  to  437,036,  the  number  of  swollen  in- 
comes rose  still  higher  and  were  as  follows:  There  were  469  net  incomes  of 
$300,000  or  over;  245  of  $400,000  or  over;  376  of  $500,000  or  over,  and  206  of 
$1,000,000  and  over.  Of  these  206,  ten  had  net  incomes  of  five  million  dollars 
and  over!  It  is  said  to  be  a  safe  guess,  that  as  late  as  1860  not  more  than  one 
man  in  the  United  States  possessed  one  million  dollars  worth  of  property, 
much  less  a  yearly  income  of  that  amount;  and  today  it  is  popularly  believed 
that  many  single  individuals  here  have  net  incomes  of  from  five  to  fifty  mil- 
lion dollars  annually. 

On  the  other  hand,  Government  statistics  of  the  industries  show  that  the 
average  wages  of  the  American  laborer  does  not  exceed  $500  per  year.  And 
this  is  his  gross  income.  He  has  no  net  income,  and  for  many  years  he  has 
been  drawing  on  his  previous  savings  to  pay  his  current  and  necessary 
expenses. 

With  these  undeniable  facts  staring  us  in  trie  face,  and  which  almost  stag- 
ger our  credulity,  is  it  not  high  time  that  our  statesmen  and  our  scholars,  our 
philanthropists  and  our  philosophers,  and  our  citizens  generally,  begin  to  look 
into  these  matters  and  try  to  find  a  way  to  check  the  current  of  our  economic 
life,  and  turn  it  into  channels  of  safety? 

As  a  further  verification  of  the  statements  made,  take  the  facts  disclosed  on 
page  692  of  the  same  Abstract.  This  table  shows  the  total  number  of  persons 
employed  in  the  "Manufactures  of  the  United  States,"  at  the  periods  men- 
Honed,  and  the  total  amount  of  wages  paid;  which  divided  by  the  total  num- 
ber brings  the  following  results: 

The  average  wages  for  each  wage-earner  per  year  was:  In  1850,  $247;  in 
1860,  $239;  in  1870,  $477;  in  1880,  $347;  in  1890,  $445;  in  1900,  $426;  in  1905, 
$437;  in  1910,  $518. 

In  the  same  industries,  as  shown  by  the  same  table,  the  average  salaries 
paid  to  "officials,  clerks,  etc.,"  were  as  follows:  In  1890,  $850;  in  1900,  $1,045; 
in  1905,  $1,106;  in  1910,  $1,188. 

Now,  what  of  Transportation,  Agriculture,  and  Mercantile  pursuits?  In 
1910  the  railroads  paid  $1,143,725,300  to  1,699,420  persons  in  salaries  and  wages, 
which  is  equal  to  an  average  of  $673  to  each. 

In  1910  the  total  number  employed  in  Manufacturing  and  Railroading  was 
9,104,733.  In  1910  there  were  12,659,203  persons  engaged  in  Agriculture.  This 
loaves  16,403,396  people  "engaged  in  gainful  occupations"  to  be  accounted  for 
and  the  Government  statistics  give  us  little  or  no  light  as  to  their  yearly  in- 
comes, but  there  is  good  ground  for  estimating  that  they  fall  far  short  of  those 
wr,  have  specified.  The  annual  wages  of  farm  laborers  are  proverbially  low, 


and  yet,  if  the  average  farmer  charged  up  to  the  account  with  his  farm,  wages 
of  himself  and  family,  and  the  current  rate  of  interest  on  the  value  of  his 
investment,  were  it  not  for  the  nominal  increase  in  the  value  of  his  land,  at 
the  end  of  the  year  he  would  find  himself  "in  the  hole."  Since,  then,  our  in- 
dustrious population,  generation  after  generation,  have  received  of  the  fruits 
of  their  toil,  barely  sufficient  to  enable  them  to  live  and  propagate  the  species, 
to  whom  has  gone  the  increase  of  wealth  of  which  we  boast,  if  not  to  the  ex- 
y.loiters  of  the  race,  revealed  to  us  by  the  Income  Tax  law,  and  whom  that 
law  has  uncovered  and  made  to  stand  out  in  all  their  hideousness? 

The  logical  and  inevitable  conclusion  from  the  contemplation  of  the  facts 
presented  is,  that  there  is  a  power  latent  in  crystallized  labor — Capital — which, 
while  in  the  hands  of  private  monopolists,  must  be  regulated  and  controlled  by 
the  Government,  if  we  would  abolish  the  slavery  now  existing,  and  which,  if 
neglected,  will  lead  to  a  revolution  as  much  more  terrible  than  that  in  France 
in  1789,  as  the  education  of  the  masses  here  is  more  general  than  it  was  there 
at.  that  time. 

At  this  stage  of  our  investigation,  the  logical  question,  "What  is  the 
remedy?"  forces  itself  upon  us.  Fault-finding  is  futile  and  is  often  carried  to 
criminal  lengths,  when  the  one  who  complains,  with  vision  however  clear,  has 
no  practical  remedy  to  suggest.  It  is  much  easier  to  see  things  as  they  exist, 
than  as  they  ought  to  be. 

For  the  past  thirty  years  the  writer  has  thought  he  saw  the  remedy  and  has 
advocated  it  untiringly,  which,  if  it  had  been  applied  even  twenty-five  years 
ago,  would  have  prevented  much  of  the  injustice  which  has  been  perpetrated 
upon  the  workers  of  this  country,  and  caused  the  great  disparity  between  the 
few  very  rich  and  the  many  very  poor,  which  has  almost  reached  its  climax 
aiid  must  be  arrested  soon,  if  we  are  to  avert  the  impending  crisis  and  revulsion. 

That  remedy  was  and  is,  that  Congress  determine,  through  the  services  of 
a  Federal  Interest  Commission,  or  otherwise,  what  is  a  just  and  equitable  rate 
of  interest  and  profit  for  money  loaned,  payments  deferred,  and  capital  in- 
vested, and  to  enact  that  as  the  legal  rate  and  make  that  rate  normal  by  pro- 
viding a  supply  of  money  to  meet  the  demand  at  that  rate. 

That  done — and  current  legislation  is  tending  in  that  direction — the  Gov- 
ernment should  require  an  accounting  of  all  Big  Business  from  that  of  bankers 
to  bakers,  and  take  by  taxation,  as  in  the  case  of  the  Federal  Reserve  banks, 
all  excess  of  the  profits  above  that  rate.  There  is  a  motive  (generally  selfish) 
for  every  voluntary  human  act.  The  law  suggested,  would  leave  no  motive  for 
oppression  by  low  wages  or  extortion  by  high  prices,  and  where  there  is  no 
wrong  motive  there  will  be  no  wrong  committed. 

The  feeble  action  of  the  Government  in  taxing  "excess"  profits  and  swollen 
incomes  simply  as  a  foreign  war  necessity,  should  be  applied  more  vigorously, 
and  as  a  preventive  of  injustice,  and  as  a  much  needed  domestic  war  measure; 
for  no  foreign  war  can  be  more  worthy  of  patriotic  solicitude  than  the  war 
between  Capital  and  Labor,  which  is  waging  in  every  civilized  country  and 
most  intensely  in  this,  by  Nature,  the  most  favored  one  on  Earth;  and  which 
must  and  will  continue  until  Justice  has  been  established  in  our  economic  and 
industrial  system.  Let  us  continue  to  a  successful  issue  our  fight  for  world 
democracy,  lest  all  liberty  be  lost  for  a  thousand  years;  at  the  same  time  let 
us  legislate  for  political  equality  and  industrial  justice  at  home. 


Address:     Alvin  H.  Low,  1417  S.  Hoover  St.,  Los  Angeles,  Cal. 


Citizen  Print  Shop  «^^*>  203-205  New  High  St. 


Standardize  Capital,  Not  Wages 

BY   ALVIN   H.   LOW 

Attorney-at-Law,  and  Author  of  "Land,  Money  and  Highways:  Evils  and 
Remedies";  "Poverty,  Interest  and  Wages" ;  "The  War  and  Economic  Jus- 
tice";  "Some  Startling  Statistics  and  Their  Warning,"  Etc.,  Etc. 


Seeing  in  a  daily  paper,  the  name  of  Senator  Warren  G.  Harding  among 
the  thirteen  who  voted  against  the  "Overman"  bill  April  29,  1918  (the  vote 
standing  63  to  13),  recalled  to  the  writer's  mind  the  statement  of  that  gentle- 
man, in  his  opening  campaign  address  in  June,  1916:  in  which  he  stated: 
"We  are  willing  to  standardize  the  wages  of  the  world";  which  statement 
was  the  inspiration  of  an  article  in  the  "National  Jeffersonian"  of  June  24, 
J916,  and  here  revised  and  enlarged  to  meet  the  present-day  occasion 

This  sentence  sounds  to  the  writer  like  the  echo  of  the  "Hazzard  Circular," 
sent  by  the  bankers  of  Europe  to  the  money-lenders  of  America  during  the 
Civil  War,  practically  proposing  to  substitute  wage  slavery  for  chattel  slavery, 
as  the  more  economical  system  for  those  in  control  of  capital — the  money 
system. 

Adam  Smith,  whose  "Wealth  of  Nations"  is  to  the  science  of  Political 
Economy  what  Sir  William  Blackstone's  "Commentaries"  is  to  the  Common 
Law,  said:  "Labor,  like  commodities,  may  be  said  to  have  a  real  and  a  nom- 
inal price.  Its  real  price  may  be  said  to  consist  in  the  quantity  of  the  neces- 
saries and  conveniences  of  life,  which  are  given  for  it;  its  nominal  price  in 
the  quantity  of  money.  The  laborer  is  rich  or  poor,  is  well  or  ill  rewarded 
in  proportion  to  the  real,  not  the  nominal  price  of  his  labor." 

Now,  measured  by  this  great  writer's  standard,  there  were,  just  prior  to 
the  outbreak  of  our  war  with  Prussian  Autocracy,  millions  of  our  sovereign 
American  citizens  and  their  dependents,  who  were  in  more  abject  slavery 
and  squalid  want,  than  were  the  four  million  chattel  slaves  in  1860;  and  all 
this  was  the  outgrowth  of  some  fifty  years  of  strictly  partisan  control  of  the 
political  government  since  that  time.  There  are  two  ways  to  standardize 
wages;  the  one  by  statute  law,  the  other  by  the  law  of  supply  and  demand. 
Three  instances  of  the  former  method  will  suffice  here — the  other  we  have 
with  us.  After  the  plague  known  in  history  as  the  Black  Death,  in  England, 
in  the  year  1349,  from  which  nearly  one-half  of  the  laboring  class  died  of 
the  plague,  Parliament  enacted  "the  statute  of  laborers,"  in  which  the  prices 
to  be  chargeoTiaborers  for  their  services,  were  specified,  and  severe  penal- 
ties were  prescribed  for  charging  or  receiving  more.  As  might  have  been 
expected,  the  great  injustice  of  this  law  caused  a  loud  protect,  anfl  finally  an 
uprising  of  the  laborers,  which  came  near  to  the  overthrow  of  the  govern- 
ment. The  second  example  is  that  of  the  law  of  the  Massachusetts  Bay 
Colony  in  1633,  which,  by  the  action  of  the  general  court,  made  it  a  rule  that 
wages  in  a  long  list  of  trades  and  occupations  should,  not  be  more  than  a 
price  or  wage  fixed  by  the  court.  "The  rates  of  inferior  workmen,"  says  the 
historian,  "were  to  be  fixed  by  the  constable "  The  third  and  most  modern 
method  of  standardizing  wages  is  that  in  vogue  in  the  Southern  States,  prior 
to  1863,  and  known  as  chattel  slavery,  where  either  by  statute  law  or  by 
the  common  consent  and  decree  of  the  Masters,  the  laborers  were  paid  or 
allowed  sufficient  food,  clothing  and  shelter,  to  keep  them  in  good  health 
and  able  to  work  and  breed,  with  the  same  tender  care,  and  for  the  same 
reason,  as  was  given  to  the  domestic  horse  or  ox 

It  is  immaterial  to  the  purpose  of  this  article,  what  specific  price  or 
wage  was  fixed  upon  in  any  of  these  cases:  the  point  of  emphasis  being, 
that  wages  were  standardized  by  statute  law. 

Popular  sovereignty,  even  as  incomplete  as  we  know  it  today,  was  not 
known  or  even  thought  of  in  those  days.  The  political  power  was  in  the 
keeping  of  the  rich,  and  hardly  questioned  by  the  poor  or  laboring  classes. 

Standardizing  wages  by  law,  is  saying  what  specific  part  of  the  proceeds 


of  a  business  shall  go  to  the  laborers  employed.  What  is  left  of  the  gross 
proceeds,  after  the  payment  of  wages  and  other  expenses,  if  any,  goes  to  the 
capitalist — a  part  as  his  wages  for  superintendence,  and  the  balance  as  profit 
or  compensation  for  the  use  of  his  capital.  If  the  wages  fixed  by  law,  how- 
ever, will  not  leave  a  profit  to  the  capitalist  there  will  be  no  business,  for 
that  would  leave  no  motive  for  him  to  engage  ,in  or  to  continue  the  business. 

As  we  have  seen,  under  the  system  of  standardization  of  wages  by  law, 
the  laborer  must  subsist  and  prosper,  if  at  all,  on  his  specific  wage;  and  if 
he  is  ever  to  become  a  capitalist,  he  must  pinch  off  a  surplus  and  lay  it 
by  out  of  his  wages,  for  he  has  no  chance  for  a  profit  over  and  above  that, 
while  he  is  simply  a  wage-earner;  and  the  possibility  of  his  doing  more  than 
live  and  propagate  his  kind  is  dubious,  since  his  wage  is  prescribed  by  the 
capitalist  in  control  of  the  legislation. 

Now  we  come  to  the  other  method  of  "standardizing"  wages — the  method 
in  vogue  in  this  country,  and  elsewhere  throughout  the  world. 

This  method  is  inaugurated  and  conducted  by  the  capitalists — the  employ- 
ing class — without  the  use  of,  or  in  direct  violation  of  statute  law.  They 
recognize  and  are  familiar  with  the  law  of  supply  and  demand,  and  conform 
to  it  with  scrupulous  respect. 

For  many  years  we  have  had  a  "protective  tariff,"  for  the  exclusive  pro- 
tection  of  American  manufacturers,  fixed  and  maintained  by  the  manufacturers 
themselves,  but  under  the  false  pretense  of  its  being  for  the  benefit  and  pro- 
tection of  American  Labor;  while  all  the  time  that  tariff  has  been  in  force, 
the  doors  of  this  country  have  stood  wide  open  for  the  immigration  or  im- 
portation of  oppressed  laborers  of  other  countries  who  have  come  in  swarms 
and  glutted  our  labor  markets,  so  that  there  has  not  been  one  year  in  fifty, 
up  to  the  commencement  of  the  present  war,  that  there  has  not  been  two 
or  more  laborers  competing  with  each  other  for  every  job — in  consequence 
of  which,  wages  have  been  forced  down  and  down,  until  the  gross  income 
of  the  head  of  the  average  family  of  five  persons  did  not  exceed  five  hundred 
dollars  per  year  in  gold;  and  a  given  amount  of  gold  today  is  less  in  exchange- 
able value  than  ever  before  in  the  history  of  the  world.  Apply  this  fact  to 
the  standard  set  by  Adam  Smith  above  quoted,  that  "the  laborer  is  rich  or 
poor,  is  well  or  ill  rewarded  in  proportion  to  the  real,  not  to  the  nominal 
price  of  his  labor,"  and  it  will  be  seen  that  the  American  wage-earner  is  as 
much  a  victim  of  "standardized"  wages  as  though  his  wages  were  fixed  by 
statute  law. 

The  trades  and  labor  unions  are  the  only  influential  organizations  at 
work  with  any  degree  of  power,  against  this  tendency  to  force  down  and 
keep  down  the  wages  of  labor  to  the  very  least  that  the  wage-earner  can 
subsist  on,  without  even,  a  decent  regard  for  the  comfort  of  himself  and 
family. 

While  Union  labor  has  done  much  in  certain  quarters  and  in  certain 
branches  of  industry,  through  a  limited  control  of  the  labor  supply,  it  has 
been  and  is  too  weak  to  cope  with  the  whole  capital  and  labor  problem, 
because  capital  can  always  survive  unemployment  longer  than  can  labor;  and 
with  the  hosts  of  the  unemployed  swarming  our  labor  markets,  the  wonder  is 
that  the  unions  have  been  able  to  do  as  much  for  the  interests  of  the  wage- 
earner  as  they  have. 

Let  it  not  be  forgotten  that  this  is  the  wage -system  which  has  had  the 
"protection"  of  one  Political  party  for  so  many  years,  and  which  party  is, 
according  to  its  distinguished  spokesman,  Senator  Harding,  "willing  to 
standardize  for  the  world."  What  about  capital  in  the  mean  time?  Is  that 
to  remain  free,  as  heretofore,  to  reap  all  the  profits  of  the  industries? 

How  long  will  the  enlightened  citizens  of  the  United  States  stand  for 
this  system?  How  long  will  we  continue  to  trust  leaders  who  have,  through 
avarice  or  ignorance,  betrayed  us  so  long? 

The  astounding  disclosures  of  recent  Income  tax  returns,  showing  the 
colossal  fortunes  owned  by  our  "captains  of  industry" — all  of  which  have 
been  acquired  within  the  past  fifty  years,  together  with  their  natural  ac- 
companiment of  poverty,  squalor  and  suffering  of  a  great  mass  of  our  popu- 
lation, is  an  indefensible  indictment  of  our  industrial  system.  It  has  long 
been  the  theory  of  the  author,  that  the  principal  bone  of  contention  between 


Capital  and  Labor,  and  which  demands  immediate  consideration,  is  the  profits 
derived  from  their  combined  employment  in  the  several  industries; — and  that 
there  is  not,  and  never  has  been,  a  uniform,  scientific,  practical  or  just  stand- 
ard established  by  law  or  otherwise,  whereby  a  just  division  of  such  profits 
must  be  made; —  and  he  presumes  to  suggest  and  urge  the  establishment  of 
such  a  standard. 

THE    BETTER    WAY 

Congress  should  ascertain,  by  every  means  available,  through  the  services 
of  a  Federal  Interest  Commission,  if  necessary,  what  are  just  rates  of  interest 
for  the  use  of  money  loaned  and  payments  deferred,  and  of  profits  for  the 
use  of  capital  invested,  and  establish  the  same  by  a  general  law. 

It  should  be  obvious  to  the  most  superficial  student,  since  there  are  only 
these  two  factors  of  production  and  distribution,  that  if  the  standard,  fixed 
lor  one  of  them  is  just,  it  must  be  equally  so  to  the  other.  Fixing  an  arbi- 
trary standard  for  wages  has  never  been  and  never  can  be  just,  when  applied 
to  Labor  alone;  but  by  fixing  the  standard  for  Capital,  Labor  will  derive  its 
just  benefits  automatically:  for,  what  is  left  of  the  surplus  after  Capital 
has  received  its  just  si.  are,  will  go  to  Labor  as  a  matter  of  course,  and  be 
equally  a  just  share. 

Such  law,  to  be  practical  and  just,  must  be  accompanied  by  a  supply  of 
money  sufficient  to  meet  the  demand  for  money  and  capital  at  such  rates. 

Congress  alone  has  the  constitutional  power  and  right  to  establish  such 
rates  and  to  provide  such  supply.  Will  it  do  so?  The  legislation  enacted 
during  the  present  Administration  in  the  interest  of  Labor,  inspires  the 
hope  that  the  good  work  will  be  carried  on,  until  the  goal  outlined  above  is 
reached. 

While  we  must  not  for  one  moment,  slacken  our  prosecution  of  the  war 
against  the  German  government,  we  should  lose  no  time  or  opportunity  in 
adjusting  our  industrial  system  at  home,  so  that  when  we  shall  have  achieved 
world -wide  democracy  politically,  we  may  set  the  pace  in  the  establishment 
of  Social  and  Economic  Justice. 

Just  laws  for  the  taxation  of  Inheritances,  Incomes  and  excess-profits, 
will  amply  serve  the  purpose  of  making  normal  the  standards  adopted. 

To  foretell  the  beneficent  effect  of  such  a  system,  would  require  another 
leaflet;  the  author  prefers,  therefore,  for  the  present  at  least,  to  leave  thus 
much  to  the  imagination  of  the  thoughtful  reader. 

Criticism   and   correspondence   solicited. 


Address:     Alvin  H.  Low,  1417  S.  Hoover  St.,  Los<  Angeles,  Cal. 

May  4,  1918 


Citizen  Print  Shop 


203  New  High  St. 


THE  WAR  AND  ECONOMIC 
JUSTICE 

By  ALVIN    H.   LOW 

Author  of  "Land,  Money  and  Highways:  Evils  and  Remedies,"  Etc. 


The  science  of  political  economy  is 
getting  some  valuable  object  lessons 
in  the  measures  employed  by  the  sev- 
eral Governments  engaged  in  the  in- 
ternational war  now  waging,  which, 
it  is  devoutly  to  be  hoped,  will  enable 
mankind  to  solve  the  problem  pre- 
sented by  Labor  and  Capital  in  their 
perennial  strife  over  the  profits  of 
the  industries,  for  in  its  last  analysis 
that  is  the  one  bone  of  contention  be- 
tween Capital  and  Labor,  and  is  re- 
flected in  the  wars  between  nations, 
economic  supremacy  being  the  goal 
sought  in  the  one  case  no  less  than 
in  the  other  the  world  over. 

Political  economy  has  been  well  de- 
fined by  one  of  its  eminent  professors 
as  "the  science  of  national  house- 
keeping," and  that  nation  is  least 
prepared  to  direct  the  order  of  in- 
ternational housekeeping  whose  own 
house  is  not  in  order. 

It  seems  to  be  a  popular  opinion 
that  the  natural  law  of  supply  and 
demand  has  been  abrogated  or  else 
was  never  more  than  a  myth,  anyway. 
The  basis  of  this  misunderstanding  is 
found  in  the  operations  of  monopolies, 
which,  by  their  power,  due  to  cen- 
tralization of  wealth  and  executive 
ability,  destroy  free  competition  and 
fix  wages  and  prices  as  arbitrarily  and 
despotically  as  the  completeness  and 
magnitude  of  their  organization  en- 
ables them  to  exercise,  and  always  to 
the  one  end — the  exploitation  of  the 
community  at  large  for  the  aggran- 
dizement of  the  few. 

The  law  of  supply  and  demand,  be- 
ing a  natural  law,  is  no  more  repeal- 
able  than  the  law  of  gravitation.  The 
monopolist  and  his  skilled  attorney 
know  this,  and  avail  themselves  of 
their  knowledge  by  conforming  to  that 
law,  by  addressing  themselves  to  the 
supply  factor,  the  demand  being  be- 
yond their  control. 

A  monopoly  may  place  the  price 
of  a  commodity  within  its  control  so 
high  that  there  is  no  apparent  demand 
for  it,  but  if  it  is  a  commodity  known 


to  be  useful,  capable  of  contributing  to 
human  happiness  there  will  be  a 
demand,  though  only  latent,  not  rising 
to  the  price  fixed  by  those  in  control 
of  the  supply.  A  price  fixed  higher 
than  the  trade  will  bear  is  simply 
prohibitive,  and  that  prices  under 
"free  competition,"  no  less  than  under 
monopoly,  will,  on  the  average,  be 
held  at  all  the  trade  will  bear  goes 
without  saying.  Competition  aims  at 
monopoly,  and  though  trade  be  started 
with  free  competition,  nominally,  it 
soon  becomes  apparent  that  the  bat- 
tle is  to  the  strong,  and  the  weaker 
gradually  yield,  and  the  survival  of 
the  fittest,  as  among  the  lower  ani- 
mals, is  the  survival  of  the  strongest 
and  most  cunning,  no  ethical  element 
entering  into  the  contest. 

Now,  it  should  be  obvious  to  the 
most  obtuse  that  if  one  of  the  factors 
of  the  production  of  supplies  receives 
more  than  a  just  return  in  profits,  an 
unreasonable  and  inequitable  net  in- 
come, it  inevitably  follows  that  either 
the  other  factor  is  receiving  less  than 
its  just  share,  or  else  the  community 
from  which  comes  the  demand  and  is 
being  exploited  in  the  name  of  service 
is  paying  too  dearly  for  its  supplies. 

In  every  commercial  country  com- 
petition at  its  best  is  only  an  unequal 
struggle  between  weak  individuals  and 
stronger  combinations,  whose  advan- 
tage too  often  consists  in  superior 
system  and  greater  economy,  which,  if 
left  without  Government  restraint, 
become  masters  of  the  field,  with  all 
the  abuse  of  power  which  that  mastery 
implies;  therefore,  it  becomes  impera- 
tively necessary  to  a  political  de- 
mocracy founded  on  justice  that  the 
Government — which  is  the  greater  and 
should  be  the  most  powerful  monopoly, 
in  which  every  citizen  is,  potentially, 
a  stockholder — should  so  regulate  and 
control  all  other  combinations  and  as- 
sociations of  a  monopolistic  character 
in  a  way  to  preserve  all  the  economies 
and  just  advantages  of  "Big  Business" 
and  to  eliminate  all  the  wrongs  and 


injustice  certain  to  exist  in  the  ab- 
sence of  such  restraint. 

Let  us  examine  briefly  recent  acts 
of  our  own  Government,  and  some  of 
those  of  other  countries,  in  the  nature 
of  regulation  and  control  of  "Big 
Business,"  pointing  toward  the  goal 
which  it  should  be  the  object  of  every 
nation  to  reach.  The  question  which 
first  presents  itself  is: 

"What  is  a  just  rate  of  interest  or 
profit  (almost  synonymous  term)  for 
the  use  of  wealth  employed  as  capi- 
tal?" 

Every  State  and  Territory  in  the 
American  Union  has,  as  a  necessity, 
in  the  absence  of  Congressional  ac- 
tion, assumed  the  right  and  duty  to 
prescribe  a  legal  rate  of  interest,  not- 
withstanding the  fact  that  none  of 
them  has  the  constitutional  power  to 
coin  money  or  supply  the  same,  or 
fix  the  value  thereof,  a  right  reserved 
exclusively  to  Congress.  The  lack  of 
uniformity  of  such  rates  is  proof  suffi- 
cient that  there  is  no  standard  rate 
fixed  by  Federal  (the  only  competent) 
authority.  The  nearest  approach  to 
fixing  a  rate  by  Congress  is  found  in 
the  law  relating  to  National  banks, 
which  prescribes  that,  in  the  absence 
of  a  State  law  fixing  a  rate,  wherever 
a  bank  is  located,  the  legal  rate  shall 
be  7  per  centum  per  year. 

Judicial  legislation  has  been 
equally  fickle  and  indefinite.  As 
familiar  examples  we  have  the  de- 
cision; of  the  United  States  Supreme 
Court,  rendered  January  9,  1909,  in 
the  suit  of  the  City  of  New  York  and 
others  against  the  Consolidated  Gas 
Company,  where  it  was  held  that  a 
service  rate  fixed  by  law  which  will 
yield  the  company  a  net  profit  of  6 
per  cent  a  year  on  its  business  is  not 
confiscatory. 

In  the  suit  of  Simpson  vs.  Shepard, 
the  celebrated  "Minnesota  Rate"  case, 
decided  June  9,  1913,  quoting  briefly 
from  the  text:  "Nor,  in  the  absence 
of  Federal  action  may  we  deny  effect 
of  laws  of  the  State  enacted  within 
the  field  which  it  is  entitled  to  occupy 
until  its  authority  is  limited  through 
the  exertion  by  Congress  of  its  para- 
mount constitutional  power." 

Now,  quoting  the  syllabus:  "13.  A 
State  may  not  fix  the  intrastate  rate 
of  an  interstate  carrier  so  low  that 
the  carrier's  entire  revenue  from  all 
its  business  in  a  State,  both  inter- 


state and  intrastate,  after  paying  only 
operating  expenses  and  taxes,  amounts 
to  only  about  4  per  cent  on  the  value 
of  its  property  in  the  State." 

It  is  in  rendering  the  decision  of 
the  court  (prepared  by  Justice 
Hughes)  that  the  court  assumes  the 
prerogative  of  determining  what  is  a 
"reasonable"  rate  of  profit. 

It  is  the  failure  of  Congress  to  exert 
its  paramount  authority  and  to  per- 
form its  obvious  duty  to  fix  a  standard 
rate  of  interlest,  and  declare  a  just 
and  reasonable  rate  of  profit,  which 
has  made  it  necessary  for  the  States 
to  do  so,  resulting  in  the  confusion 
and  instability  of  those  matters,  to 
the  great  detriment  of  commerce  and 
perpetuating  the  strife  between  Capi- 
tal and  Labor. 

So  far  as  is  known  to  the  writer, 
no  government  has  determined  and 
fixed  a  rate  of  interest  and  profit  as 
the  result  of  scientific  investigation. 
Every  act  of  government  on  the  sub- 
ject has  been  arbitrary  and  in  de- 
fiance of  the  law  of  supply  and  de- 
mand, and  correspondingly  abortive 
from  the  standpoint  of  justice. 

Section  7  of  the  "Federal  Reserve 
Act"  is  the  most  conspicuous  at- 
tempt of  government  to  limit  the 
profits  of  "Big  Business,"  in  the  pro- 
vision limiting  the  annual  dividends 
of  stockholders  to  6  per  cent,  and  tak- 
ing the  excess,  if  any,  by  the  Govern- 
ment as  a  franchise  tax.  These  stock 
holders,  however,  are  the  member 
banks.  That  provision,  therefore,  is 
only  "a  gentlemen's  agreement"  that 
the  banks  will  not  exploit  each  other 
to  exceed  6  per  cent,  but  in  their 
dealings  with  the  general  public  they 
remain  unrestrained  as  to  the  profits 
they  may  extort. 

The  international  war  has  caused 
the  enlargement  or  extension  of  the 
principle  discovered  in  that  Regional 
Bank  provision,  and  not  only  the 
United  States,  but  each  of  the  other 
belligerents — in  response  to  the  obvi- 
ously just  demand  that  property  as 
well  as  men  shall  be  subject  to  the 
draft — has  levied  a  tax  on  "excess 
profits"  and  swollen  incomes,  without, 
however,  curbing  the  methods  of 
acquiring  those  excess  profits  and  un- 
righteous incomes. 

It  must  be  obvious  to  anyone  who 
thinks  that  no  part  of  the  money  taken 
by  taxation  from  excess  profits  or 


swollen  incomes  is  ever  restored  to 
the  persons  or  communities  from 
whom  it  was  originally  extorted. 

To  have  excess,  there  must  first  be 
a  normal.  A  normal  profit  or  income 
should  be  just  and  ethical.  The  war 
has  brought  excess  profits  so  conspicu- 
ously to  the  public  view  as  to  create 
a  demand  for  drastic  legislation  as  a 
deterrent,  and  the  pity  of  it  is,  the 
Government,  as  yet,  has  made  no  ef- 
fort to  abridge  the  process  of  acquir- 
ing excess  and  unrighteous  profits  and 
incomes,  but  has  contented  itself  with 
exacting  a  share  of  the  loot,  which  is, 
in  essence,  compounding  or  winking 
at  a  damnable  wrong  which  it  is  in 
duty  bound  to  brand  a  felony. 

Recent  income  returns  and  labor 
statistics  for  many  years  (see  U.  S. 
Statistical  Abstract)  disclose  startling 
facts,  which  ought  to  make  every 
American  citizen  look  well  to  his  civic 
duties,  as  a  matter  of  self-preserva- 
tion. For  example:  In  the  year  1913 
of  the  one  hundred  million  people  in 
the  United  States  only  357,598  had 
net  incomes  of  over  $3000.  Of  these, 
84  persons  had  net  incomes  of  $300,- 
000;  44,  over  $400,000;  91  over  $500,- 
000,  and  44,  over  one  million  dollars. 
The  record  stops  there. 

In  the  year  1914  the  number  of  re- 
turns fell  to  357,515,  but  the  larger 
incomes  rose  in  number  as  follows: 
There  were  147  in  the  first,  69  in  the 
second,  114  in  the  third  and  60  in  the 
fourth  class,  respectively. 

In  the  year  1915  the  total  num- 
ber of  returns  fell  to  336,652,  and  the 
larger  incomes  increased  in  number 
as  follows:  There  were  254  in  the 
first,  122  in  the  second,  209  in  the 
third,  and  120  in  the  fourth  class 
respectively. 

To  speak  of  the  net  income  of  the 
average  American  wage-earner  is  a 
mockery. 

At  and  for  a  long  time  previ- 
ous to  the  outbreak  of  the  Euro- 
pean war  the  yearly  gross  in- 
come of  the  average  American 
laborer  did  not  exceed  $400,  and 
today  it  does  not  exceed  $500,  all 
of  which  is  an  appalling  object 
less  in  wealth  centralization. 


These  facts  and  figures  ought  to 
suffice  to  show  how  imperative  is  the 
duty  of  Congress  to  inform  itself  as 
to  what  would  constitute  a  normal, 
ethical  and  just  rate  of  interest  and 
profit  and  to  legislate  to  establish  that 
rate,  and  then  the  tax  on  excess  profits 
and  swollen  incomes  would  take  the 
entire  excess,  not  as  a  dividend  of  a 
flourishing  but  unrighteous  enterprise, 
but  as  one  of  the  penalties  for  ex- 
tortion and  unmerciful  exploitation, 
the  final  object  of  every  private 
monopoly. 

The  necessity  for  establishing  such 
just  rate  will  be  made  more  obvious 
by  the  report  of  the  Interstate  Com- 
merce Commission,  now  engaged  in 
taking  account  of  the  physical  value 
of  the  railroads  of  the  country,  to  be 
used  as  a  basis  for  computing  service 
rates,  otherwise  that  arduous  work 
will  have  been  useless,  and  the  Gov- 
ernment be  left  to  the  unscientific 
method  of  regulating  freight  and  pas- 
senger rates  now  and  heretofore  in 
vogue. 

If  it  requires  the  labors  of  a  Federal 
Interest  Commission,  which  seems 
probable,  to  determine  what  is  a  just 
and  normal  rate  of  profit  and  in- 
terest, not  a  day  should  be  lost  in 
creating  such  commission.  When  such 
rate  is  once  determined,  it  will  be 
the  duty  of  Congress  to  declare  it, 
and  to  see  to  it  that  a  sufficient  sup- 
ply of  money  and  capital  is  provided 
to  run  the  legitimate  business  of  the 
country  upon  such  normal  and  equi- 
table basis  which  will  go  to  promote 
peace  betwen  Capital  and  Labor  and 
be  a  precursor  of  peace  among  the 
nations. 

Let  us  prosecute,  with  all  our  might 
to  a  successful  issue,  the  war  against 
the  despotism  of  our  foreign  foe, 
otherwise  the  liberty  to  shape  our 
own  destiny  and  to  promote  a  truer 
democracy  will  be  lost  for  a  thousand 
years ;  but  while  we  fight  irresponsible 
tyranny  abroad,  let  us  legislate  for 
greater  liberty  and  economic  justice 
at  home. 


H.  IX 

1 4 1 7  S,  Hoover  St.,  Los  Angeles,  Cal, 


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MF  J*N.  21.  1908 


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